Sharing Economy

California Proposal to Let Uber Drivers, Other Sharing Economy Workers, Unionize

New measures pose existential threat to sharing economy


California Assemblywoman Lorena Gonzalez's latest high-profile legislative effort has been billed as a fairly modest measure to provide a "safety net" for workers in the growing sharing economy.

"All we're trying to do is set up a legal framework by which, if there's 10 independent contractors all working for the same employer, they could get together and organize and collectively bargain with that employer," the San Diego Democrat told KFBK radio.

This "legal framework" would do more than "organize" one of the few burgeoning areas of California's economy. Imposing industrial-era work rules on companies such as Uber would squelch the flexibility, innovation and cost-savings that are at the heart of their success. Allowing groups as small as 10 to organize into union-like associations is radical stuff, given the tiny size of such bargaining units. It would make such organizing a fait accompli.

There's little question: The bill poses an existential threat to California's sharing economy.

And the far-reaching consequences of this proposal don't stop at the Sierra Nevada. The newly introduced measure, A.B. 1727, could directly challenge federal antitrust law, which considers independent contractors to be individual businesses. The proposal echoes efforts already passed into law by the Seattle City Council. Gonzalez last year tweeted from Seattle that she was meeting with the "incredible folks behind the Uber organizing legislation. So impressed."

"The bill's passage makes Seattle the first city in the nation to attempt to give drivers the right to collectively bargain with app-based ridesharing companies," reported Capitol Hill Seattle. The newspaper quoted Councilmember Kshama Sawant, who said, "Ever since sharecropping, the sharing economy has meant sharing in one direction. That is, workers have the privilege of sharing what they produce with their bosses."

Really? As I wrote in a 2014 column, these ridesharing applications actually destroy a sharecropping-like system that exists now. In post-Civil-War America, newly freed slaves worked the land—and paid a large share of the crops to the land owners. They got dragged deeply into a cycle of debt and poverty because they could barely earn enough to cover the payment. Under the current model, cities limit the number of permits to operate a cab, which drives up their cost. Cab owners foist those costs onto drivers, who work long hours to pay them.

Before the city dissolved that system, San Diego cab drivers earned around $5 an hour, according to one widely cited report. By freeing drivers from such servitude, Uber, Lyft and other similar platforms enable them to compete and thrive, while paying an affordable portion to the companies. Instead of being servants, drivers are independent business owners. The rise of ridesharing has done far more to improve this antiquated industry than unionization.

The Gonzalez bill differs from the Seattle approach by creating associations of those who work for individual companies and are supervised by a state agency. The bill's backers say it passes antitrust muster because of state involvement, but critics say it still violates antitrust standards. We're still waiting to see the legislative details published, but myriad legal challenges are a near certainty.

For instance, earlier this month the U.S. Chamber of Commerce filed a federal lawsuit challenging Seattle's ordinance. "The ordinance unlawfully authorizes for-hire drivers to engage in this per se illegal concerted action by forming a cartel, speaking as a single unit through an exclusive representative, and engaging in horizontal fixing of prices and contractual terms," according to the complaint. Congress' intent was "to insure that independent contractors remain regulated by 'the free play of economic forces,' or market forces, rather than by city ordinances imposing collective-bargaining schemes."

That indeed is why these app-based businesses—which cleverly work around the current entrepreneurship-stifling and highly regulated business models—do so well. They rely on markets and consumer choice rather than government and union edicts.

Following passage, even Seattle officials expressed concern about their new measure. Mayor Ed Murray let the bill become law, but worried publicly about the cost. Seattle Finance Director Fred Podesta issued this warning: "The proposal raises serious questions under federal and state law, and if passed could involve the city in prolonged and costly litigation."

Seattle's measure only deals with transportation companies, whereas California's effort has begun to metastasize. "On Wednesday Gonzalez broadened the bill's scope beyond the on-demand workers for platforms like Uber, TaskRabbit and Postmates to include contractors in a range of sectors, not just those dispatched by smartphone apps," reported the San Francisco Chronicle. "Truck drivers at the state's ports are another potential target group, for instance, she said."

 One Los Angeles Times column from last year suggests the Gonzalez bill might anger unions because it bypasses them to create new associations. But it's hard to see how this effort, pushed by a cadre of longtime union allies, is anything other than a significant expansion of collective-bargaining rights into some of the most innovative portions of the economy. This battle is just beginning, but rest assured, the stakes are anything but modest.

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  1. It’s enough to make one despair, this attitude that workers as individuals are helpless in the face of cruel heartless employers, but let 10 of them forcibly represent the others, and suddenly all is light and goodness. Never do they question the obvious paradox, that helpless individuals suddenly become all-wise when they join together. It’s as if they’ve never applied for any government permit or license, never been to the DMV, never tried to collect insurance on a lost package from the post office.

    The same philosophy that says a government paycheck turns naive, gullible, ignorant humans into Top.Men.

    I take that back. It’s enough to make me puke.

    1. There is nothing wrong with people banding together to form unions as long as the government does not impose them on business nor require workers to join.

      It is no different then people banding together to form companies

      1. Exactly. That’s why I said “forcibly”.

      2. And as long as they don’t form a monopoly over the supply of labor in that industry. If you have multiple labor supplying groups competing with each other then there is no problem. Somehow I don’t imagine that will be the effect of the legislation, however.

        1. That’s pretty much nonsense. There are 100 million people who aren’t even in the labor force. Every one of them is potential competition for any 10 people who do choose to unionize. And the legislation is enabling people to do what is currently illegal to do.

          1. No, it’s forcing Uber and Lyft et al. to deal with unionized employees.

            You say it’s ‘illegal to do.’ In what way? If a group of union drivers band together and contact Uber, informing them that they won’t work unless they’re promised hire wages, will they get arrested? I doubt it.

            Once this bill is passed, will. Uber maintain the right to fire all unionized workers and hire non-union ones without penalty? I doubt it. You don’t seem to understand the idea of legal vs. illegal. People can associate as they please, and their employers can hire and fire them as they please. A law like this won’t make anything legal; rather, it will make it illegal for Uber to hire and fire as they please; it will force them to hire or prevent them from hiring people or changing employees’ pay based on the fact that they belong to some organization with the backing of a government agency.

      3. There IS one big difference, even if a union doesn’t use force.

        Unions negotiate as a collective yet get compensated as individuals. They get to have their cake and eat it too.

        Corporations negotiate as a collective and get compensated as a collective.

        Individuals negotiate as individuals and get compensated as individuals.

        This is fundamentally unfair to corporations and individuals. If unions were made to be compensated as a collective (i.e., the company hiring the union workers pays the union all the wages and then the union pays the individual members of the union), then and only then could a union claim that they are like people banding together to form companies.

        Otherwise, this is a strange four-party form of politicking that results in unsustainable parasitism over the long term. The four parties involved are: company, union, employee, and consumer. Guess which party is always the loser in this rigged situation.

      4. “It is no different then people banding together to form companies”
        It most certainly is not.
        It would be more like companies banding together to form a monopoly.

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  2. “Mayor Ed Murray let the bill become law but worried publicly about the cost.”

    That mayor’s a brave man. Truly an Abraham Lincoln for our times.

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  3. Given that 30% of Uber’s ride hails occur in China, it might decide it can live without California.

    1. Every company should realize that California isn’t worth the cost and ignore them.

      1. ^THIS^ x 1,000,0000

        Every year, I beg my Fondue Overlords to pull everything they can out of Kaleyfornkneeuh except the bare minimum to transact business.

      2. Yeah, only then the Californians leave their state since there is literally no work there for them and they spread their commie beliefs. It’s almost as if they *can’t* make the connection between their political beliefs and the end result of them.

        It would be sad, or funny, if it wasn’t so dangerous.

        1. Not all of us are commies, I swear! I would move to AZ but I like everything here besides the politics.

          1. I apologize for the hyperbole. Clearly, not all Californians are socialists, communists, and various other forms of progtard. Sadly, the majority of them are. I genuinely feel sorry for the sane people that either can’t leave or don’t want to for a variety of reasons.

          2. I’m not a commie either. And I find nothing here to be better than dozens of other places, except the weather. But the weather difference is huge and trumps all else, for me. After having endured winters (and rain-heavy, humid summers) in other places I’ve lived, such as Chicago and Cleveland, I find the weather here life-altering. Luckily, I live in Orange County, where the % of progtards is much lower than in the other densely populated parts of the state.

        2. California is such a lovely state that it is a shame to have to work there…

        3. In my experience as a third-generation native Californian, the commies are not *from* California – they are New Yorkers, largely. Also some Midwesterners. CA has long been a place for utopians to try to realize their dreams.

          1. Well if they aren’t from there, they have infested it to the point to where they overwhelmingly control it. Good ‘ol Moonbeam.

            Moot point in my book, but good to know I suppose.

          2. 3rd generation? You’re a newcomer. Though as a 4th generation Californian, I second your opinion that most of the commies are from some other state, while the old timers are more conservative or libertarian. Very few people are actually from California.

          3. Well, a lot are also intellectuals/2-years-of-college-graduates from the white-guilt, social and environmental justice no matter the cost because I’m in my 20s and don’t understand how money works because money is evil and never really learn about it into my 50s ilk.

            This would have been me had I not listened to some Ron Paul/Peter Schiff stuff in 2011 and realized I didn’t know jack shit about economics and maybe I should look into it.

            1. “Well, a lot are also intellectuals/2-years-of-college-graduates from the white-guilt, social and environmental justice no matter the cost because I’m in my 20s and don’t understand how money works ”

              Like I said, New Yorkers.

              1. I disagree. I meet a lot of born-and-raised-in-Calif. young people that are absolutely leftist/progressive in their politics. They have been raised in a single-party state shoving its propaganda through the Democrat-controlled indoctrination camps–oops, I mean school system–such that we can no longer lay the blame on New Yorkers.

                Also, I had two friends from New York City actually move back to New York City because they couldn’t stand California. It’s grown into a monster quite different than its master.

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  4. Well that’s one way to kill it.

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  5. Imposing industrial-era work rules on companies such as Uber would squelch the flexibility, innovation and cost-savings that are at the heart of their success.

    Feature, not a bug, as far as the government is concerned. It could help make the taxi companies competitive again.

    1. Why innovate, when you can legislate the competition into impotence!

      Ah, government! So wise!

  6. I don’t particularly like my Union. It doesn’t have the influence everyone attributes to public sector unions. Hell, it doesn’t even have the influence of private sector unions. We’re lucky if a contract is negotiated within three years of the last one expiring and is non-negative. When the membership flat out rejected the last contract (the first ever in the union’s history) the leadership not only decided we’d voted wrong and called for a revote, it ignored the illegal negotiating practices by the employer (who initiated layoff proceedings as a retaliatory measure targetting only people within the union) and lobbied on behalf of the employer.

    That leadership got voted out in a landslide but their replacement was just a whiny entitled twat who got booted after a single term, because none of the votes were for her but against the prior administration.

    It’d be nice to see what it’s like to have a stereotypical pubsec union for once…

    Sorry, I ranted off-topic.

    PS, PEF sucks.

    1. All the PEF members should just quit their jobs and show all of us.

      1. Buy more of my books and I’ll be able to afford to.

        1. With respect and no malice, write better books so that more people buy them so that you can afford to quit.

          You don’t even have to write “better” books. Most people will say “Fifty Shades of Grey” is atrocious writing, but lots of people paid for it. Perhaps a better term is “more profitable books.”

  7. “All we’re trying to do is set up a legal framework by which, if there’s 10 independent contractors all working for the same employer, they could get together and organize and collectively bargain with that employer take the independence out of being an independent contractor,”

  8. Sure, go ahead, bargain collectively. Go make your living wage. And bring about the advent of the self-driving Uber just that much sooner. Feel free to bring a pitchfork to Assemblywoman Gonzalez’s office shortly thereafter. Just be sure to do it collectively.

  9. Democrats truly are the Socialist and Communist Parties of America.

    1. No – they’re worse than that. Socialists would want ride services nationalized, not unionized. While it would be expensive and inefficient, everyone would be able to afford what little, shitty service there would be. What the Democrats want is something that cronies can still profit off of, so that the service will still be shitty, but only the rich will be able to afford to use it.

      1. Look at actual Socialist countries and what ‘Nationalization’ actually means. The plebian can’t afford it, and doesn’t have access to it, whatever ‘it’ might be. I would use ‘socialized’ medicine in Cuba as an example. One national system for the plebian, another system entirely for visitors/political class. Both systems are shitty, but only one of them might actually cure you.

        1. Not advocating for Socialism – just pointing out that the Democrats are not Socialists. They are something different and, in many ways, more evil.

  10. The bill poses an existential threat to California’s sharing economy.

    That’s the point. The socialists in this country utterly loath the sharing economy. Too much freedom, which as we all know is not good for the collective, comrades!

    1. If the industry isn’t prepared to adapt to its drivers forming unions, there is no great loss. Other, more competitive, more innovative companies will be waiting in the wings.

      1. Most industries are very much prepared to adapt to their employees forming unions.

        They fire those employees, and hire new ones.

        1. “They fire those employees, and hire new ones”

          Uber don’t fire employees. Uber don’t hire employees.

          1. Yet those non-employees are talking about unionizing.

            1. “Yet those non-employees are talking about unionizing.”

              And talking about unionizing is not going to destroy the industry. More competitive, more innovative companies will be waiting in the wings.

              1. They’re not just talking, they’re legislating.

                1. “they’re legislating”

                  … to allow groups of 10 to form their own union. It’s called Freedom of Association. Again, if Uber is up to adapting to these new circumstances, someone else will be.

                  1. And what of Uber’s freedom of association?

                    1. “And what of Uber’s freedom of association?”

                      Nobody forced Uber into associating with drivers who want to unionize. It’s legislation that is preventing drivers from unionizing. Odd to see that Libertarians are so enthusiastically supporting these arbitrary laws.

                    2. Nobody forced Uber into associating with drivers who want to unionize.

                      That is exactly what Seattle is planning to do.

                    3. Seattle San Diego

                    4. Uber should have been more careful about who they hire, weeding out potential union organizers. After all, vetting drivers is about all they do as a company. If Uber can’t learn from this experience, others will. I promise you, allowing drivers the right to unionize will not destroy the industry.

                    5. So you’ve got no answer to the things I actually said?

                    6. Make your choices and live with them. Be prepared to adapt to changing circumstances. Like any other successful business. Until we have a magic time machine, that’s all the answer you are likely to get.

                    7. Keep on trucking, mtrueman, you’re sure to stumble into some kind of intellect at some point.

                    8. If Uber can’t adapt, others will. Unionizing drivers might mean the end of Uber, but the industry will keep on trucking. You have my word on it. Weird isn’t it how creative destruction is working its magic on the much vaunted Uber platform, while 19th century behemoths like unions soldier on. I can see how a Reason reader and commenter such as yourself would feel frustrated and cheated.

                    9. Notice how kbolino finally realized he was arguing with a retard and declined to respond to your latest bit of drivel.

                    10. “Notice how kbolino finally realized he was arguing with a retard ”

                      kbolino knew from the start when he chose to initiate conversation that he was arguing with a retard. He declines to respond because he realizes that the retard is correct and his position is indefensible. There is no good reason to prevent small groups from unionizing, and rather than admit this he takes the cowardly way out.

                    11. You keep saying “Uber will adapt”, pretending that they have an obligation to succumb to whatever bs these parasitic unions are going to pull. You are stupid and dishonest. No libertarian is against the right of association, and we don’t limit our thinking to the level of leftwing dogma which only recognizes the right to unionize but ignores the right of an employer to not deal with a union.

                    12. Once again, no one is preventing anyone from doing anything. It’s this Gonzalex rather who is trying to prevent Uber from hiring and firing contractors as it pleases in order to minimize prices.

                      Why not squash this idiotic legislation and say, “there’s no good reason to prevent companies from firing or not hiring employees or contractors or whatever who aren’t willing to work for the price they set, and surely those people will be able to adapt and find other jobs.” Why not say that? Why is it that a company, in your febrile mind, should have more of a legal obligation to adapt to extortion by organizations enfranchised by the state with the right to monopolize labor supply than workers should have an obligation to actually come to voluntary terms of employment with a prospective employer, or else go elsewhere for work?

              2. You just don’t pay attention, do you? It’s not some sentimental attachment we have to Uber that’s our concern. It’s the fact that, whether they get replaced or not, costs go up, and the number of drivers go down.

                And being able to deal with unionized extortionists is not innovative in the way that’s good for consumers. You say things like that as though you have no idea what you mean. It’s like some politician starts denying licenses to all businesses that don’t bribe him or his friends, and you would brush it off with some stupid remark about how ‘some innovative company that knows how to effectively bribe politicians effectively and innovatively.” Wonderful; how does that improve life for those disemployed by artificiallyincreased wages? For the people who don’t get services they desire because of the state’s constriction of supply? For the consumers who have to pay higher prices?

                1. “For the consumers who have to pay higher prices?”

                  How is this my concern? You choose a lifestyle that requires a service like Uber, I choose one where I can get where I want to go on foot for the most part.

  11. Since when was collective bargaining a privilege?

    Do we need laws just to permit people to get together and collectively bargain? Are there other laws that prohibit collective bargaining unless licensed by the state?

    1. Yes. Independent contractors are considered businesses, and for them to form a society that fixes the price of their services would be a price-fixing cartel in violation of anti-trust laws.

      1. And the purpose of the US Chamber of Commerce is to be able to fire every employee (except the CEO and illegals) – turn them into independent contractors – and then proceed to use their employer power to gut them so that CEO salaries can continue to rise at twice the rate of corporate profits.

        It is completely nuts to honestly believe that price-fixing can actually apply to 10 individuals when there are 100 million individuals who aren’t even in the fucken labor force. And completely toolish for libertarians to once again sell their dumbass Randian/anarcho souls to big business and pretend that that is the ‘free market’ at work. Yeesh. No wonder libertarians are ignored on economic issues. The only economic liberty they seem to support is liberty at the top of existing power structures.

        1. I wipe my ass with your Che T-shirt.

        2. So you’re accusing libertarians of defending existing power structures? LOL That is rich, the leftoid doth protest too much. Being a statist and collectivist in the 21st century means *you* are defending the coercive power structure of the state, no matter how you pretend to be new and “progressive”.

          Economic power is not the same as political power (money and choice vs. guns and coercion), but there would be no left if you had not been brainwashed to worship the coercive power of the state and to fear freedom and personal responsibility. And being ignored in a country that is going down the shitter is not an indictment of libertarianism, it shows that the mainstream you support is a failure.

        3. So, anti-trust laws should just not apply to labor then? Only to businesses? I mean, god forbid businesses should be allowed to minimize labor costs to bring down prices to the benefit of the consumer public – the vast majority of the population. Fuck them, let’s force businesses to drive up prices to the benefit of select unionized workers. How altruistic.

          Otherwise, pretty much everything you said is false.I see now you’re down to just making stuff up.

  12. Dumb ass drivers! Unionizing will never get you that tipping policy change nor will it get you a bigger cut. You’re better off waiting for the next ride sharing company that will meet those demands…

    – former Uber driver

    1. You’re better off waiting for the next ride sharing company

      Or better yet, founding it.

    2. Uber seems to have enough drivers, so obviously they are paying enough. Why should they change anything?

  13. You know, the idea that

    1) You need new legislation to allow people to work together with their piers in a formal capacity, and
    2) That the way that legislation would work would undermine freedom of association overall.

    Speaks to something very problematic with the entire way the US system understands and enforces Unions. I just wish, at this point, I understood what exactly was wrong, so I could have some idea on how it could be fixed.

  14. I think it’s great if a group of 10 Uber drivers want to “collectively bargain” for themselves. I don’t see why that needs a “legal framework”. Of course, Uber’s response to 10 drivers going on strike would be little more than a shrug. Uber already has excellent data on how much they need to pay in order to get the drivers they need, and they automatically adapt that to conditions anyway.

  15. If that’s how anti-trust law works, why aren’t all unions illegal? Do they not all represent price-fixing on labor?

    1. They donate to the right causes. JFree knows that laws only apply to people who they’re designed to fuck over, and that excludes organized labor.

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  17. here IS one big difference, even if a union doesn’t use force.

    Unions negotiate as a collective yet get compensated as individuals. They get to have their cake and eat it too.

    Corporations negotiate as a collective and get compensated as a collective.

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  20. I am in support of this framework as this reduces the stress of contractors to meet each and every employer individually and then sometimes few bargain and few were not allowed them to bargain and sometimes not and this is particularly an act of loss for the workers who work under contracter.As few workers get high payments and few get less depending on the bargain that employer did with the contractor and on the other end this is useful for the employer also as he will now know that this is the minimum amount on which contractor will agree to work for you which saves stress and work for employer also.

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